This blog is related to many IT Governance domains such as Service Management and ITIL, Enterprise Architecture and SOA, CMMi, COBIT, TOGAF, ISO 9000, Innovation, organisations supporting these frameworks such as itSMF and the Open Group. There are many synergies between these domains..and this is an opportunity to discuss these topics... The views expressed in this blog are personal and do not reflect the beliefs or opinions of the organizations to which the author belongs or is affiliated to.

28 October, 2011

What does developing an IT Strategy mean?

I have observed many situations where a c-level person was supposed to document an IT Strategy in a short period of time in order to prepare the following year's annual budget. Very often lacking much supporting documented business information the result is a weak strategy, sometimes ignored by the user's community, the key stakeholders.

A weak IT strategy can be costly and wasteful, especially for resource-constrained organizations that operate with minimal budget, tools, knowledge and people. It also implies that organizations cannot respond to changing business requirements rapidly enough. The absence of strategic anticipation causes organizations to be inefficiently reactive, forcing them to work in a constant state of catch-up.

An IT Strategy should answer the following questions:

Are we doing the right things with technology to address the organization’s most important business priorities and continuously deliver value to the clients?

Are we making the right technology investments?

Do we measure what is the real value to the organization derived from that technology?

Is our current Information Technology agile enough; flexible to continuously support a successful organization?

Is our Information Technology environment properly managed, maintained, secured, able to support the clients, and is it cost effective?

Can our strategy support current and future business needs?

Quite often the first thing we should consider when writing such a document is the targeted audience and its content. Different people with varying roles and responsibilities may read an IT Strategy within a company, so the document may need to serve several different purposes. It is not easy to pitch a strategy to different levels in the hierarchy within an organization, and at the appropriate level of detail. Sometimes it is too detailed and does not always match the stakeholder’s needs.

An IT Strategy is an iterative process to align IT capabilities with the business strategy and requirements:

It is a documented and approved process (part of the organization’s governance framework)

It is iterative (it needs to be frequently be revisited). Traditionally, IT strategies are updated and communicated on an annual basis, usually to meet budget cycles. This should be considered the minimum review period. If an emerging technology surfaces that has the potential to enhance the business, it should be investigated and communicated to the business as soon as possible. A one-year cycle may be too late.

It is a strong alignment of business and IT capabilities rather than designing IT solutions to support business requirements

Assuming that both business and IT capabilities drive each other

Assuming that business drives IT and not the other way around

The IT Strategy sets future direction for IT function in the organization

Ensuring that the IT budget is spent on value creation activities for the business

Creating shareholder value

Helping to maximize the return on IT investments

The IT Strategy may include sub-elements such as:

Infrastructure strategy

Application strategy

Integration strategy

Service strategy

Sourcing strategy

Innovation strategy

This pyramid diagram can be used to illustrate the IT strategy and vision, and how the technology and business strategies are totally aligned. At the top of the pyramid is the enterprise overarching vision. Aligned below that is how IT supports the vision by becoming a premier IT organization in creating competitive advantage for the clients. The IT vision is in turn supported by three pillars: integration, improvement, and innovation.

To deliver this , the business strategy should clearly be articulated and documented taking into account some IT aspects. There are different ways of gathering these business inputs.
The first approach is a very classical one where you develop a questionnaire in business terms which asks each business unit to identify their future requirements for infrastructure growth, taking into account capacity and availability requirements. This extracts the data you need for business driven strategy.

This questionnaire may include some of the following examples of questions:

1. What are your top 5 business “pain” points? These are things that you wish you had a solution for
2. What are your top 5 business objectives? These can be short term or long term, can be driven by revenue, cost, time, time to market, competitive advantage, risk or various other reasons
3. How do you plan to achieve these objectives?
4. What will we gain by leveraging IT Capabilities across the business?
5. What is in the way of achieving your business imperatives?
6. Can IT help achieve your business imperatives?
7. How much do you spend on IT capabilities?
8. What is your technology ROI?
9. Does your company have a plan for technology?
10. Does your business plan include a technology plan?
11. Where is IT being used across your business unit?

The second approach would be the use of Enterprise Architecture that I will explain later on.

With this input you may now start to consider the structure of your document. It may look similar to this example below: An executive summary

An introduction

The purpose

The background

The Business drivers

The Organizational drivers

The IT drivers

The Business and IT aspects

The Business Goals and Objectives

The IT approaches and principles

The IT components

Business application systems

IT infrastructure

Security and IT Service continuity

Structure, organization and management

IT Governance

Skills, knowledge and education

IT Financial management

KPIS, measurement and metrics, balance scorecards

Technologies opportunities

Key issues

And this is where Enterprise Architecture may have to play an important and even crucial role. Some companies I have encountered have an Enterprise Architecture team, and in parallel, somebody called an IT Strategist. Frequently the connection is non-existing or quite weak. Other organizations may also have a Strategic Planning unit, again without any connection with the Enterprise Architecture team.

An Enterprise Architecture must play the important role of assessing; existing IT assets, architecture standards and the desired business strategy to create a unified enterprise-wide environment - where the core hardware and software systems are standardised and integrated across the entire organisation’s business processes, to greatly enhance competitive advantage and innovation. The IT Strategy details the technologies, application and the data foundation needed to deliver the goals of the corporate strategy, while Enterprise Architecture is the bridge between strategy and execution; providing the organising logic to ensure the integration and standardisation of key processes that drive greater agility, higher profitability, faster time to market, lower IT costs, improved access to shared customer data and lower risk of mission-critical systems failures.

As a real example, TOGAF 9 is perfect way to produce that IT Strategy document during the Phase F: Migration Planning.

Below you will find the relationship between some phases of the ADM and the structure of the above document. It needs to be said that we should probably use a Strategic architecture level to deliver a first version of the document, which then could be reviewed with Segment or Capability architectures.

Content

Examples

Enterprise Architecture and TOGAF

An executive summary

An introduction (This document must be business oriented)

Content

Examples

Enterprise Architecture and TOGAF

The purpose

Key elements of the scope, audience, time horizon

The Preliminary phase is about defining ‘‘where, what, why, who, and how” Enterprise Architecture will be done and will provide all information. It also creates the conditions and context for an Architecture Capability

This is covered by the Phase A: Architecture Vision. An Architecture Vision sets stage for each iteration of ADM cycle.

-Provides high-level, aspirational view of target the sponsor uses to describe how business goals are met and stakeholder concerns are addressed
-Provides an executive summary version of full Architecture
-Drives consensus on desired outcome

The Business Scenarios is used to discover and document business requirements, identify constraints, etc.

Identify business goals and strategic drivers
-Ensure that descriptions used are current
-Clarify any areas of ambiguity
Define constraints
-Enterprise-wide constraints
-Architecture project-specific constraints

The Organizational drivers

Profitability, financial performance, change in strategic objectives, end of the product development life cycle, mergers and acquisitions, staffs, risks

The IT drivers

New or obsolete technologies, updates

Considering that IT is part of the Business, these drivers should also be considered in that phase

Identify business goals and strategic drivers
-Ensure that descriptions used are current
-Clarify any areas of ambiguity
-Define constraints
-Enterprise-wide constraints
-Architecture project-specific constraints

When we define the Architecture Governance Framework during the Preliminary Phase, we identy the various touch points with existing other frameworks in the organization
IT principles should have already have been defined by the IT department

IT Governance will be considered when the Architecture Governance Framework is defined. There will obviously be touch points between the ADM and some other best practices used by the organization. IT Governance is defined outside of the Enterprise Architecture programme

Skills, knowledge and education

Skills, knowledge and education

Enterprise Architecture skills will have to be addressed by the Architecture Capability Framework. Other skills may also be identified independently of the Enterprise Architecture programme

Every governance frameworks may have its own KPIs. Enterprise Architecture KPIs may be added to that list.

Technologies opportunities

Emerging technologies, business related benefits

This can be done in parallel of the Enterprise Architecture programme

Key issues and initiatives

Summary or link to the IT Project portfolio

This can be done in parallel of the Enterprise Architecture programme

Color legend

Direct relationship with Enterprise Architecture

Indirect relationship with Enterprise Architecture

Produced somewhere else

The next step would be the review of the IT Strategy document by the main stakeholders who would accept or reject technology opportunities. This could also be used as an important source of information for the Strategic Planning exercise (please refer to another post for additional information: “How Strategic Planning relates to Enterprise Architecture? “).

Once the IT Strategy has been reviewed, amended and authorised (which should in reality already be approved, as it is the result of various ADM cycles and the output of Phase F: Migration planning), the multi-disciplinary programme team for the implementation during Phase G: Implementation Governance, will deliver the solutions to the business.

As already mentioned previously, the outline strategies will be refined and expanded with a low level of detail when addressing Segment and Capability architectures. This is the part that meets the first challenge described above, where we need different levels of detail for different stakeholders. The documents should be hierarchical, with the ability to drill down to lower levels as more detail is required.

One of the main reasons for developing an Enterprise Architecture with TOGAF 9 is to support the business by providing the fundamental technology and process structure for an IT Strategy. Enterprise Architecture is the superset that represents both Business and IT Strategy; this is reflected in Enterprise Architecture’s basic structure of strategy, business architecture and technology/information architecture. One can certainly do an IT Strategy without Enterprise Architecture, but Enterprise Architecture cannot be done without an IT Strategy; the same would apply to business strategy/business architecture.